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Isla Verde Trading, Inc., a Cebu-based importer and exporter, filed its 2023 income tax return and VAT return on April 20, 2025. The BIR’s data analytics flagged two discrepancies: (i) a discrepancy between Isla Verde’s reported gross receipts and third-party information indicating higher revenue, and (ii) a discrepancy between cash receipts and bank deposits. On April 20, 2025, the BIR issues a Notice of Discrepancy (NoD) addressed to Isla Verde, listing the two items and requiring a written explanation and submission of underlying documents within 15 days, with a caution that failure to respond or an unsatisfactory explanation may lead to an assessment. The taxpayer responds on May 5, 2025 with a letter stating: (a) higher revenue stems from cross-border exports routed through a local distributor and qualifies as non-taxable export; attached are export invoices and distributor agreement; (b) the excess cash deposits represent prepayments from foreign buyers and payments deposited via a correspondent bank, which were not immediately recognized in the books; attached are bank statements and remittance receipts. The BIR subsequently asks for further supporting documents. In light of these facts, which statement best describes (a) the controlling doctrine or rule governing the Notice of Discrepancy and its status in the assessment process; (b) the taxpayer’s remedies at this stage; and (c) the likely next steps if the explanation is deemed unsatisfactory?